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The law at the root of these problems is the Digital Millennium Copyright Act, or DMCA. In particular, part of the DMCA makes it illegal to circumvent digital locks that restrict access to copyrighted works. The original idea was to give copyright holders more tools to prevent people from infringing their copyrights. Unfortunately, though, a law that penalizes people for just breaking a software lock—regardless of whether or not they infringe any copyrights in the end—sets up a system ripe for abuse.
In this case, the locks aren't there to protect creative works—they're there so that cell phone companies can keep customers from taking their phones to another carrier—even when the phone is fully paid for. Even though the law is supposed to prevent circumventing the digital locks on a copyrighted work, the argument that the phone companies make is that the "copyrighted work" at issue is the phone's firmware or operating system.
This is bizarre. Sure, you need to access that firmware, which is copyrighted, but nothing that you're doing when you do that is related to copyright law in the first place—you're just trying to use your phone. No one's trying to pirate copies of Android or iOS or what have you, and the particular locks in question wouldn't prevent someone from doing that in the first place.
No, the real reason is that once someone's spend a few hundred dollars on a phone, the prospect of having to buy a new one all over against just to switch cell providers is going to be more daunting. This is a classic case of consumer lock-in, and it's something that a lot of companies try to do. And a lot of companies have tried to abuse the DMCA to do it.
In the past, we've seen inkjet printer manufacturers and garage door makers trying to claim DMCA protection for digital locks on their systems—trying to lock out generic ink cartridges and universal remotes, respectively. Those attempts failed in court, and the hope was that those examples would discourage similar behavior in other markets.
But apparently that's not happening. In previous rulemakings, the Copyright Office was willing to grant the exemption. This time around, though, the Office seemed swayed in large part by the argument from phone companies that the market will provide—that they will offer a certain number of unlocked cell phones already. I do wonder if the existence of the previous exemptions might not have convinced phone companies to offer unlocked phones in order to compete with phones that users would themselves unlock. But it's at this point in the discussion that I find myself wondering why on earth I'm discussing the state of the market and competition in cell phone providers at the Copyright Office.
Because of the twisted way in which the DMCA is being applied, we now have questions of competitive behavior in the cell phone industry being made by—the Copyright Office, which, with all due respect, isn't the shining center of telecommunications or competition expertise within the federal government.
So while the White House may not have the power to rescind the decision made in the DMCA rulemaking, the problems it creates are real, far-reaching, and in need of reform.